The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency

Alireza Naghavi, Alexander Mihailov () and Etienne Farvaque

No 410, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: This paper aims to explain the rise and fall of communism by exploring the interplay between economic incentives and social preferences transmitted by ideology. We introduce inequality-averse and inefficiency-averse agents and analyze their conflict through the interaction between leaders with economic power and followers with ideological determination. The socioeconomic dynamics of our model generate a pendulum-like switch from markets to a centrally-planned economy abolishing private ownership, and back to restoring market incentives. The grand experiment of communism is thus characterized to have led to the discovery of a trade-off between equality and efficiency at the scale of alternative economic systems.

Date: 2012
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Related works:
Journal Article: The Grand Experiment of Communism: Discovering the Trade-Off between Equality and Efficiency (2018)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2018)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
Working Paper: The Grand Experiment of Communism: Discovering the Trade-off between Equality and Efficiency (2011)
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